Price trend of oil, feedstock and commodity polymers for week of Sep 3, 2006 in Asia

OIL Oil has dipped to its lowest level in the last two months, touching US$ 69/barrel. No significant developments have occurred, except slowing of US economy in the first 6 months of 2006. Inventory in US is adequate and the demand is lower. It is expected that oil will remain softer in September 2006. NAPHTHA The softening of oil price and weaker demand have reduced price of naphtha below US$610/MT to US$608/MT. Naphtha will remain softer in the remaining period of September 2006. It could go down to about US$590/MT. ETHYLENE Ethylene price jumped sharply from US$1350/MT to US$1400/MT. The increase of US$50/MT was pretty sharp and was caused by tight supply & higher demand. It could remain high through the rest of September 2006. PROPYLENE Propylene, like ethylene, also soared by US$80/MT mainly due to tight supply position. It is to be seen whether this high price would be sustained in the remaining part of September 2006. EDC EDC price rose marginally by about US$10/MT & reached US$400/MT. The primary reason is high price of ethylene. It is expected to remain flatter in September due to some weaker demand of PVC. VCM VCM price remained stagnant at US$720/MT because the producers desire to offset the price increase of ethylene. However, there is a resistance from PVC producers who are required to buy VCM for their plants. The weaker demand of PVC would keep price stable around this level in the rest of September 2006. STYRENE Styrene price lowered significantly from US$1270/MT to US$1220/MT due to sharp drop in the price of benzene. Ethylene price increase did not have much impact mainly due to weaker demand of PS in Asia. It is expected that September will witness no significant change on higher side but if benzene continues to slip, prices could go down. Any semblance of stability could be due to stronger ethylene. LDPE LDPE price recorded an increase from US$1420/MT to US$1440/MT. Chinese producers are demanding LDPE but are not willing to pay higher price. However, high price of ethylene and its tight supply, along with producers of LDPE needing higher price to attain some margin over ethylene- will increase the price of LDPE. However, the clash between producers & Chinese customers will continue & decide the price of LDPE in September 2006, inevitably increasing t is inevitable that it would increase some what. LLDPE LLDPE unlike LDPE remained stable at US$1400/MT. However, the Middle East producers are demanding higher prices for the remaining part of September 2006. HDPE HDPE price saw an increased of US$10/MT reaching US$1430/MT, mainly due to an increase in price of ethylene. It is estimated that price could go up to US$1450/MT soon. September will witness hardening of HDPE price. Ethylene price increase is responsible for an increase in the price of HDPE. PP PP price remained stagnant at US$1420/MT with Chinese processors waiting for price correction. Some traders as well as raw material suppliers are trying to liquidate inventory before lowering the price. It seems that there is a resistance from processors particularly on account of weaker demand to some extent. September 2006 will witness either stability or lowering of price by about US$30-40/MT. PVC PVC price increased by US$10/MT & reached US$950/MT although there is not much activity from processors. Chinese PVC suppliers are facing anti dumping duty as price hovers around US$900/MT. It would appear that PVC would not see a dramatic change both on the positive and negative side during September 2006. PS GPPS price lowered marginally to US$1335/MT from US$1340/MT. The prime reasons are significant reduction in price of styrene monomer as well as some drop in price of oil. Demand does not appear to be strong. No significant change is expected for September 2006. ABS ABS like PS lowered marginally from US$1640/MT to US$1630/MT. No significant movement is seen this month as the demand seems to have tapered off. Price of oil & styrene monomer are not likely to go up and could in fact lower further to some extent. Conclusion Oil, after witnessing steep upward movement in July 2006 onwards was found to be at the lowest level in the last 2 months. Naphtha also remained softer mainly due to somewhat weaker demand except that of PE. Ethylene & propylene continued to surge higher due to tight supplies and stronger demand. PP is expected to provide some relief in September 2006, but PE is expected to remain stronger. While EDC rose marginally due to increase in price of ethylene, VCM could not match the rise and remained stagnant. Further more, due to weaker demand in PVC from China, VCM is not likely to go up in September 2006. PE grades have shown somewhat modest increase despite steep increase in ethylene price this week. PP, however, remained stable. With the fear of price correction, it is quite feasible that PP price may get softer in the remaining period of September 2006. PVC & commodity styrenics have become weaker & are likely to trade in the softer region in September 2006.